Author: Fang-yueh Chen Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We examine the home country tariff and subsidy policies when a domestic firm uses an imported key input to produce its low-quality exports, and foreign firms produce high-quality exports as well as the key input. We show that the decisions of foreign vertically integrated firms on strategy regarding input supply depend on the tariff-inclusive and quality-adjusted comparative advantage between countries. We prove that the home country's optimal policy is to tax either its goods exports or its key input imports. We also show that without vertical integration, if and only if goods are not very quality-differentiated, the home country should subsidize either its goods exports and/or its key input imports.
Author: Hong Hwang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper shows that optimal trade policies for vertically related markets depend crucially on production technology. By employing a production function with variable-coefficient technology, it shows that return to scale is crucial in determining the direction of government intervention. Therefore, the assumption of fixed-coefficient production technologies, which has been popular in industrial organization and trade literature when modeling vertically related markets, should be used with caution.
Author: Winston W. Chang Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
The paper introduces the conjectural variations and bargaining approaches into a vertical model, wherein a foreign upstream firm supplies one input to two downstream firms that produce differentiated products for the export market. Various downstream firms' competition modes and upstream's pricing schemes emerge as special cases of this formulation. The authors show that the optimal export policy of a downstream country depends crucially on the downstream firms' conjectures of rivals' responses, the upstream firm's pricing schemes, their relative bargaining powers, and the degree of product differentiation. If the upstream's pricing or bargaining power is strong (weak) and if the downstream's degree of competition is high (low), a tax (subsidy) is optimal owing to a strong (weak) vertical profit-shifting effect and a weak (strong) horizontal effect.
Author: Stephen Jui-Hsien Chou Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies the optimal export policy in the context of a vertically related industry with differentiated products, and analyzes the effects of the degree of product substitutability and market structure on the determination of such a policy. It is shown that the results obtained in a similar model with homogeneous goods rivalry no longer hold when the goods are differentiated. Indeed, the degree of product substitutability plays an important role in the determination of export policies, and also determines whether a country can be better off under a trade policy war compared to free trade. The use of a differentiated product setting also allows one to compare export policies and countries' welfare levels under both Cournot and Bertrand competition. It is found that the results of the comparison are also sensitive to the degree of product substitutability.
Author: Barbara J. Spencer Publisher: ISBN: Category : Commercial policy Languages : en Pages : 52
Book Description
A domestic firm is partially dependent on a foreign vertically integrated supplier for a key intermediate product when both firms are Cournot competitors in the market for the final product. The foreign supplier generally charges its domestic rival a price for the input that exceeds the independent monopoly level and vertical foreclosure may occur. Domestic policies applied to the vertically related products can increase domestic welfare by reducing the price and increasing the availability of imported supplies of the input. Vertical integration in the foreign supplier has significant implications for all three domestic policies considered: a tariff or subsidy on imports of both products and a domestic production subsidy. The foreign vertically integrated firm tends to reduce its price for the input in response to an import tariff on the final product, whereas a simple monopoly supplier would respond by increasing its export price. Also domestic cost conditions for the production of the input can critically affect the desirability of a tax as apposed to a subsidy on intermediate imports.
Author: Barbara J. Spencer Publisher: ISBN: Category : Competing, International Languages : en Pages : 52
Book Description
We examine conditions under which a low cost vertically integrated manufacturer has an incentive to export an intermediate product to its higher cost (vertically integrated) rival rather than to vertically foreclose, fully cutting off supplies. The nature of supply conditions in the importing country, the size of an import tariff on the final good and optimal policy by the exporting country are all shown to be important for this decision. The exporting country may gain by taxing exports of the final (Cournot) product even though, under Cournot competition, an export subsidy is optimal in the absence of a market for intermediates. In this case, optimal policy also requires an export tax on intermediates, but the higher tax on final goods serves to divert sales to the more profitable market for intermediates increasing the extent of vertical supply. It is optimal to tax the export of both goods or to subsidize the export of both goods. It is never optimal to tax one and subsidize the other.
Author: Jan I. Haaland Publisher: ISBN: Category : Commercial policy Languages : en Pages : 0
Book Description
This paper derives optimal trade and domestic taxes for a small open economy containing a monopolistically competitive (MC) sector in which firms may have heterogeneous productivity levels. Domestic protection brings gains from expanding the number of product varieties on offer, but these gains (and the corresponding rates of domestic subsidy or of import tariffs) are reduced by heterogeneity of foreign exporters who may withdraw from the market. Our analysis encompasses special cases in which the domestic MC sector can expand or contract flexibly, or is of fixed size. In the latter case gains from protection arise from terms of trade effects and, since various margins of substitution are switched off, only the relative values of domestic taxes, import tariffs and export taxes matter
Author: Michael A. Utton Publisher: Edward Elgar Publishing ISBN: Category : Business & Economics Languages : en Pages : 168
Book Description
The book begins by setting out the principles of competition and trade policies, and then goes on to address the impact of market globalisation on what are usually thought of as traditional antitrust concerns. These include the analysis of the difficulties arising from collusion and other restrictive practices, government sponsored 'voluntary co-operation', vertical restrictions and market access, pricing strategies of dominant firms and international mergers, all illustrated with a number of prominent case studies. The author concludes with an illuminating discussion on the feasibility of international co-operation on competition policy, the faltering progress that has been made so far and the prospects for future advances.
Author: Fang-yueh Chen
Author: Hong Hwang
Author: Hong Hwang
Author: Winston W. Chang
Author: Stephen Jui-Hsien Chou
Author: Barbara J. Spencer
Author: Barbara J. Spencer
Author: Bokyeun Han
Author: Jan I. Haaland
Author: Michael A. Utton